HDFC Q3 earnings: Profit up 11% on-year, beats estimates

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Net profit beats estimates: HDFC Ltd has reported an 11.44% year-on-year rise in standalone net profit at Rs 3,260.69 crore for Oct-Dec 21 quarter, beating street estimates. Analysts had earlier anticipated a net profit of about Rs 3,200 crore. The total revenue from operations came in at Rs 11,783.66 crore against Rs 11,707.00 crore in the corresponding quarter last year.

Net interest income rises: NBFCs primary business is to borrow money and lend the same at a rate higher than the rate at which they borrowed. The income generated from this differential is known as net interest income. This is an extremely important number to truly find out how much the company is earning from its core operations. HDFC's net interest income (NII) increased by 6.96% year-on-year to Rs 4,284 crore in Q3FY22 from Rs 4,005 crore in Q3FY21. It is in line with analysts' estimates of Rs 4,180 crore. The Net Interest Margin (NIM) was 3.6%.

HDFC results: Highlights

Strong loan growth: HDFC’s assets under management (AUM) at the end of the Dec quarter, stood at Rs 6.19 lakh crore, up from Rs 5.52 lakh crore in the year-ago period. Individual loans comprise 79% of the total AUM. On an AUM basis, the growth in the individual loan book was 14%. On an AUM basis, the growth in the individual loan book was 16% and growth in the total AUM was 12%. For the quarter, the average loan size was Rs 33 lakh.

Asset quality: The Gross NPAs for the quarter ended Dec-21 stood at Rs 12,419 crore, equivalent to 2.32% of the loan portfolio. This includes loans worth Rs 2,746 crore that were not 90 days past due but was classified as NPA. Excluding this, the gross NPA ratio would have been 1.81% compared with 2% as of Sep 30.

The gross individual NPAs stood at 1.44% of the individual portfolio as of Dec. 31, while the gross non-performing non-individual loans stood at 5.04% of the non-individual portfolio.

Details of restructured loans: As of December 31, 2021, loans restructured under the RBI’s Resolution Framework for COVID-19 Related Stress was equivalent to 1.34% of the loan book. Of the loans restructured, 64% are individual loans and 36% are non-individual loans. Of the total restructured loans, 34% is in respect of just one account. In January 2022, further recovery has been made in respect of this one account, and post this, the restructured book stands at 1.21% of the loan book.

Capital Adequacy Ratio: HDFC's capital adequacy ratio stood at 22.4%, of which Tier I capital was 21.7% and Tier II capital was 0.7%. As per regulatory norms, the minimum requirement for the capital adequacy ratio and Tier I capital is 15% and 10%, respectively.

HDFC Quarterly Results: Review

HDFC, the country's largest mortgage lender, has reported a good set of numbers for the quarter ended Dec-21. The NBFC has reported a healthy rise in the topline, beating street estimates. The company has also posted strong growth in AUM and advances. The Corporation continued to have the largest number of home loan customers of over 2.7 lac who have availed benefits under the Credit Linked Subsidy Scheme (CLSS).  In December 2021, the Corporation recorded its second-highest monthly individual disbursements ever.

The demand for home loans and the pipeline of loan applications continues to remain strong. Growth in home loans was seen in both the affordable housing segment as well as in high-end properties. The increasing sales momentum and new project launches augur well for the housing sector. HDFC Ltd share closed 2% higher on Wednesday at Rs 2,617 per share.